BANKS and e-wallet providers should “evolve” from charging transfer fees and instead expand products and services to grow their business, a senior Bangko Sentral ng Pilipinas (BSP) official said.
“[I]f you look at the market, we desire more improvements in the other financial services,” BSP Deputy Governor Mamerto Tangonan told reporters on Monday.
“The market can benefit from better savings products, credit, insurance protection to help the people cope with shocks, and also investments,” he added.
“We would like to encourage the industry to move up to that level, instead of just doing transfers. And so, everyone has to evolve.”
Tangonan said the central bank was now reviewing submissions by banks and e-wallet providers justifying why they had yet to comply with BSP Circular 1238, which amended payment fee rules to make these fairer, more transparent and proportionate to expenses incurred by service providers.
Many financial institutions have already complied by eliminating or lowering transfer costs, but a number have yet to do so.
“As part of our duty, we asked them to explain why the fees that they’re charging for interbank transfers are such,” Tangonan said.
“[L]ast Wednesday was a deadline. And then we are validating whether their fees and the manner they came up with that amount complies to the Circular 1238,” he added.
Most of the country’s top 20 banks and e-wallet providers — which account for roughly 90 percent of total digital payment transactions — have complied with the BSP’s directive, Tangonan said.
He noted that financial institutions traditionally earned revenue from transfer fees even before the National Retail Payment System was introduced and InstaPay and PESONet were launched in 2017 and 2018.
But rather than focusing only on fund transfers, Tangonan said the BSP wants financial institutions to expand and improve other services that remain underserved.
He emphasized that the BSP was not prescribing zero transfer fees but ensuring that charges imposed were reasonable and based only on legitimate switching costs.
“We expect compliance with the circular,” Tangonan said.
“[F]or us, as long as the pricing mechanism, the circular is complied with, we’re happy. The rest is up to the consumers.”
On concerns that electronic wallet operators’ business models differed from those of traditional banks and therefore require different pricing structures, Tangonan said the BSP would not adopt separate regulatory rules.
“The payment system is one network,” he said, adding that applying different pricing rules could create bottlenecks, reduce efficiency and encourage regulatory arbitrage.
“We cannot have different rules for different people. Otherwise, you create inefficient bottlenecks. Our gains will be lost,” Tangonan said.
Tangonan instead encouraged firms to innovate both on the revenue side by offering more financial products and on the cost side by adopting shared infrastructure, cloud technology and common payment gateways that can reduce operating expenses.
“As more people join the network, it becomes more useful because users can pay more merchants and transfer money to more people. This attracts more users,” he said.
“The larger number of transactions helps reduce the average cost of running the system, making it easier for providers to keep fees low.”
